On June 15, 2012, HRT O&G provided notice of early termination of a 2010 services agreement and a 2011 rental agreement relating to Rig No. 115. Subsequently, on July 23, 2012, HRT O&G provided notice of early termination of a 2010 services agreement and a 2011 rental agreement relating to Rig No. 116. HRT O&G has claimed such early termination is for cause due to breaches alleged to have been committed by Tuscany Perfurações Brasil Ltda. or Tuscany Rig Leasing S.A., as applicable, including unsatisfactory safety and performance rates. We have denied the allegations and challenged HRT O&G’s termination on the basis that it failed to provide details of the alleged breaches or to provide us with the required curative period to remedy any alleged breach. On August 1, 2012, we invited HRT O&G to engage in negotiations in an effort to reach an amicable solution. No settlement was reached during such negotiations. On August 31, 2012, we filed a request for arbitration in the International Chamber of Commerce Court of Arbitration (the “ICC”) claiming that HRT O&G is required to pay, with interest and monetary adjustments: (i) a US$10.0 million early termination penalty per rental contract (total of two), (ii) a US$650,000 demobilization fee per rig (total of two), (iii) the demobilization, transportation and mobilization rates applicable during, at least, the required 60-day prior notice period, (iv) indemnification for the losses arising from HRT O&G’s failure to comply with contractual terms for redelivery to us of the rigs and (v) all outstanding invoices due to us. The ICC has confirmed the arbitrator submitted by each party and the chairman of the arbitration panel has been selected. On October 29, 2012, HRT O&G filed its initial response, which included a counterclaim for US$25.0 million regarding alleged failures by Tuscany Perfurações Brasil Ltda. and Tuscany Rig Leasing S.A. to perform their respective contractual obligations. Tuscany Perfurações Brasil Ltda. and Tuscany Rig Leasing S.A. will respond to the counterclaim by November 29, 2012, and, at this stage, believe the counterclaim is without merit>